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Macroeconomic Impact on Business Operations
Introduction
The monetary policy consists of three tools used by the Federal Reserve, also known as the Fed, to control the money supply; open-market operations, reserve ratio, and the discount rate. These tools influence the money supply and in turn affect macroeconomic factors such as the gross domestic product (GDP), the unemployment rate, the inflation rate, and the interest rate. �gMost economists believe that monetary policy influences economic activity and prices by affecting the availability and cost of money and credit to producers and consumers.�h (Meulendyke, 1998, p. 189). The goal of the Fed is to use the correct combinations of monetary policies to achieve a balance between economic growth, low inflation, and a reasonable rate of unemployment.
Federal Reserve Tools
Open-Market Operations
The Fed uses the publicly traded (open) market to buy and sell government securities to and from commercial banks and the......

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Approximate Word Count: 1937
Approximate Pages: 8 (250 words per double-spaced page)

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